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Florida leaders in denial about budget problem, Sink says

TALLAHASSEE — Florida Chief Financial Officer Alex Sink suggested Friday that the state's Republican leaders are in denial about the dire economy and they should call a special legislative session now to deal with the impact on the state budget.

Sink, speaking to the Council of 100 in Palm Beach, said a possible $1-billion gap in state funding demands attention now, not later.

"I do not see any way we can afford to wait until March to deal with a potential $1-billion-plus shortfall in this budget year," Sink, the state's only elected Democratic executive, said in an interview later. "That's just an impossible situation."

Either the governor or the two leaders of the Legislature call special sessions, and so far Gov. Charlie Crist and new leaders of the House and Senate, all Republicans, are taking a wait-and-see approach. And Sink's criticism comes as Crist is reaching the midpoint of his term.

Crist said through a spokesman that a decision on a special session will come after a new revenue estimate on Nov. 21. But that could produce an even bleaker fiscal picture, as it has consistently for more than a year.

Rep. Ray Sansom, R-Destin, the incoming House speaker, said, "I don't anticipate the need for a special session at this point." He noted Crist has authority to shift unspent funds from special reserve accounts, with approval of a panel of lawmakers known as the Legislative Budget Commission, to cover shortfalls.

That is how state leaders have staved off deep budget cuts so far. On Sept. 10, a legislative panel agreed to Crist's suggestion to use $672-million from the state's post-hurricane recovery reserves to shore up the budget. That still left a projected budget hole of $795-million in the current fiscal year. Much larger shortfalls are projected for next year.

So far, however, there's no economic rebound in sight. The actual taxes collected in September were $40-million below an estimate that was revised downward in light of a weak economy.

The slowdown in tax revenue has prompted Sink in the past three months to ask Crist to seek legislative approval to make cash transfers within state agencies of up to $1.25-billion to cover the state's expenses.

Sink, a former bank executive whose duties include serving as state treasurer, said Florida should consider eliminating expenses that are not "mission-critical," such as $140-million in school recognition grants to schools that get A or B grades.

She criticized Crist for ordering state agencies to hold back spending 4 percent across the board, saying it would be more appropriate to make strategic or targeted cuts.

Sink speculated that the unwillingness to call a special session is because it would reinforce a negative image of the economy and budget.

"It's going to be ugly. It's not fun," she said. "We did the easy cuts last year."

The upcoming few weeks could make it difficult for state leaders to find time for a special session.

Crist hosts a two-day meeting of Republican governors in Miami next week, and the following week is a brief organizational session of the new Legislature, a largely ceremonial event.

The week after that is Thanksgiving, and two weeks later, on Dec. 12, Crist will marry Carole Rome in St. Petersburg.

Times researcher Emily Rieman contributed to this report. Steve Bousquet could be reached at bousquet@sptimes.com or (850) 224-7263.

Budget picture goes from bad to worse

Money is much tighter now than in March, when the Florida Legislature convened to write the state's 2008-09 budget. A glance at the outlook for the state's operating fund as the economy has soured:

March: Economists predict the state will have $25.3-billion in tax revenue to spend on operations for the fiscal year. A month later, lawmakers add an additional $486-million from reserves to cover a $25.6-billion spending plan for state programs and services.

August: Revenue projections fall to $24.3-billion. With other changes, the state budget is nearly $1.5-billion in the red for the year. A month later, a special legislative committee agrees to spend $672.4-million from reserves to shore up the budget and stave off cuts for the short term, hoping the economy will rebound.

October: State economists report tax collections in September were $40.4-million less than expected, adding to the state's anticipated deficit.

Source: Florida Office of Economic & Demographic Research

Florida leaders in denial about budget problem, Sink says 11/07/08 [Last modified: Tuesday, November 11, 2008 1:40pm]
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